Appeals court grants stay in Kentucky case

A Kentucky appeals court Friday granted a stay of the forfeiture order that would have affected 141 Internet domain names belonging to various gambling sites. The Interactive Media Entertainment & Gaming Association (iMEGA) and the Interactive Gaming Council (IGC) had requested the stay.

The move curtails a forfeiture hearing scheduled for Dec. 3, giving the appeals court time to consider the issues raised in iMEGA's petition seeking the overturn of the original order.

"We're glad that the Appeals Court recognized the need to prevent the immediate forfeiture of those domain names," said Joe Brennan, Jr., chairman of iMEGA.

"The Commonwealth's attorneys have tried from the very beginning to push this seizure action through at a breakneck pace, so that by the time any of the domain owners realized what was happening, they would have lost their rights to their domains," added Brennan, referring to the fact the original complaint was filed under seal and the affected domain names were unaware that there had even been a seizure motion and hearing.

Panel of judges to assess petitions

The hearing on iMEGA's petition is scheduled for Dec. 12 in front of the same three-judge appellate panel that granted the stay. At that hearing, the panel will first consider whether the lower court lacked jurisdiction to order the domain seizures and whether Secretary Brown lacked the authority to initiate the seizure action in the first place.

If jurisdiction was lacking, then the other issues become moot. However, if the lower court's exercise of jurisdiction is found to be proper, then the appellate court will consider whether the lower court misapplied Kentucky's specific "gambling devices" law in ordering the seizures and whether Kentucky's actions violate the Commerce Clause of the United States Constitution.

In a separate procedural ruling, the appellate panel agreed to combine iMEGA's petition with a separate one filed against the forfeiture order by the IGC, an international online gambling trade group. Their petition echoes some of the arguments in the iMEGA petition, attacking the lower court's jurisdiction over the domain names on the grounds that they are not located in Kentucky and are not "gambling devices."

Two amicus briefs have been filed in support of the petitions to overturn the seizure order. The Poker Players Alliance (PPA), a one-million-plus-member poker advocacy group, filed a brief, focused primarily on the issue of the lower court's failure to address, analyze and rule on the issue of poker being a game of skill that should be exempt from Kentucky's antigambling legislation.

The PPA argued that the trial court judge had the responsibility to engage in fact finding on the issue of whether it was skill or chance that predominates in poker. Had he done so, they claim, the judge would have properly ruled that poker is not a game of chance and therefore should not be banned under Kentucky's antigambling statute.

Free speech, civil liberties advocates chime in

The Commonwealth's attempt to seize Internet domain names also drew the attention, and support, of various free speech organizations. The Electronic Frontier Foundation (EFF), the Center for Democracy and Technology (CDT) and the American Civil Liberties Union of Kentucky (ACLU) have joined in filing an amicus brief in support of IGC's petition for an order vacating the seizure order.

In their amicus brief EFF, CDT and the ACLU argue that the lower court's actions ordering seizure of the domain names violated the First Amendment, the Commerce Clause and the Due Process Clause of the United States Constitution.

The brief also argues that the lower court exceeded its jurisdiction in ordering seizure of domain names for registrars located outside of the state.

While the brief does not address the substantive issue of whether online gambling is legal in Kentucky, it focuses on the broader question of whether a state court judge can order Web site operators around the world to block access to their sites based on local law and then reach beyond the state's borders to seize noncomplying Web sites.

"The court's theory - that a state court can order the seizure of Internet domain names regardless of where the site was registered - is not only wrong but dangerous," said EFF Senior Staff Attorney Matt Zimmerman.

"If the mere ability to access a website gives every court on the planet the authority to seize a domain name if a site's content is in some way inconsistent with local law, the laws of the most world's most repressive regimes will effectively control cyberspace."

Attorney General distancing himself?

In another development, Kentucky Attorney General Jack Conway has asked to have his name removed from the domain name case. This confirms earlier speculation that the attorney Ggeneral, who had failed to comment on the domain name case, was distancing himself from the case.

The original seizure action was brought not by the attorney general, but by Secretary of Justice and Public Safety J. Michael Brown.

The issue of whether Secretary Brown, as opposed to the Attorney General, had standing to bring the original action was argued at the lower court, but Judge Wingate allowed the case to go forward as presented.

The case, while brought on behalf of Secretary Brown, is actually being handled by outside counsel working on a contingency fee basis.

In its writ petition to the Court of Appeals, iMEGA had added Attorney General Conway as a real party in interest as, according to Kentucky law, the attorney general must appear on behalf of Kentucky in all cases in the Court of Appeals in which the Commonwealth is involved.

There is cautious optimism following the issuance of the stay as the petitioners now look forward to having their day in court.

"Now, we hope to have a fair hearing regarding our petition, because we're confident that Kentucky law is on our side, and that the lower court erred in ordering these seizures," said iMEGA's Brennan.

"The bottom line is that this move by Kentucky cannot be allowed to stand, because if it did, it would hand an 'ultimate weapon' to governments here and abroad to stifle Internet content that does not meet their approval."

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